Global economic woes are far from American consumers' thoughts

November 19, 1998

KALAMAZOO -- The economic troubles plaguing southeast Asia
and Russia have barely dented American consumers' shopping enthusiasm.
According to Dr. Christopher Korth, WMU professor of finance and
commercial law and an expert on international business, Americans
are "on a spending spree." "The stores are pretty
optimistic that they will see a three to five percent increase
this Christmas," he says. "The American economy is being
driven by consumer spending right now. Part of that is a result
of the 'wealth' factor where people feel wealthier because of
the increase in stock prices. People are worried about jobs, but
they don't seem to be worried about their jobs. They hear of layoffs,
but it doesn't worry them." Korth warns however, that the
aggressive spending can't continue indefinitely. "Last month
the U.S. had a negative savings rate, which is unprecedented in
American history," he notes. This means people are spending
more than they are saving. And unlike other seasonal ailments,
Americans don't seem too concerned about catching the economic
flu. "There isn't a widespread perception among American
consumers of risk from overseas," says Korth. "The economic
troubles in Asia and Russia don't bother people in Dowagiac. They
don't think these problems affect them." Korth can be contacted
at (616) 387-5371.